WALES’ biggest building society has launched a new scheme to make it easier for first-time buyers to purchase new homes.

Principality is helping would-be home-buyers with a new mortgage indemnity guarantee (MIG) scheme.

The scheme, provided by MI Business Solutions, gives house builders the opportunity to purchase an insurance policy which protects the loan, at no cost to the mortgage lender.

It will enable Principality to offer up to 95% loan to value (LTV) mortgages to applicants who may otherwise struggle to purchase a new build property.

The Principality said the move forms part of its commitment to stimulate the mortgage market, and ensure that Welsh buyers have access to high quality, affordable housing.

Christopher Johnson, head of mortgages at Principality, said: "This scheme allows us to offer mortgage products of up to 95% LTV on brand new homes, unlocking the Welsh property market to more people than ever.

"It will be open to first time buyers who are struggling to build a big deposit, offering another way to access properties, and these buyers are absolutely key to getting the housing market moving again. It will also enable builders to operate with confidence, knowing there is finance available for buyers interested in their homes, thus leading to more properties being built in Wales which is great news for the wider Welsh economy."

Within Wales the scheme, which is offered through brokers, is available to Barratt Homes/David Wilson Homes/ Ward Homes, Bellway Homes, Bloor Homes, Bovis Homes, Linden Homes and Redrow Homes.

The Principality’s move comes as the Welsh Government has launched its own NewBuy Cymru scheme to make it easier for first time buyers in Wales to get the keys to a new home.

That scheme will support the purchase of up to 3,000 new build homes up to value of £250,000.

The Welsh Government and house builders will act as guarantors so that buyers can secure high loan to value mortgages that would not otherwise be available to them. Buyers will contribute a 5% deposit. The scheme, which the Welsh Government is supporting with a guarantee, could enable an investment in housing of up to £500m within a five-year period.

Mr Lewis said: "We mustn’t let these difficulties stop us doing what we can to help the housing system work more effectively. Nor should it stop us being ambitious.

"Our mortgage guarantee scheme NewBuy Cymru is one intervention that can help us fulfil this ambition. I confirmed the Welsh Government’s support for this scheme in November last year and since then, considerable interest has been expressed in the scheme. I want this scheme to help up to 3,000 households to buy their first house or move up the housing ladder.

"If we achieve 3,000 sales at the average price of a new home, this could mean sales of up to a value of half a billion across Wales, and with estimates that for every £1 spent on house-building, £1.40 in gross output will be generated across the economy as a whole, this is quite a contribution to the Welsh economy."

The scheme launched this month by the Welsh Government is Wales’ version of the New Buy scheme which has operated in England since March 2012.

Richard Price, planning and policy manager for Wales at The Home Builders Federation said: "The announcement of NewBuy Cymru has been a really welcome step and something we have been pushing for. It has the support of builders, lenders and the Welsh Government. It is a really good opportunity to increase mortgage lending and to get people onto the property ladder. If other lenders can offer products to stimulate mortgage lenders we would also support that."

The launch of the Principality and Welsh Government schemes comes as the Westminster Government’s Funding For Lending Scheme has led to a reduction in the interest rates being offered to first-time buyers in Wales.

The scheme provides lenders, including the Principality and Monmouthshire building societies, with access to borrowing at low rates, provided that the money is loaned on to customers.